New crypto users are mostly under 35, and they’re skilled – a bulk of those investing are IT professionals, MBA graduates, engineers, and start-up owners. They’re also curious to sample variety, and are investing in things like De-Fi assets and Non-Fungible Tokens or NFTs. Another happenstance through 2021 was the entry of many more women traders – local exchanges unanimously reported a rise in the share of women investors to 30-40 per cent, doubling from the previous year’s figure of 15 per cent.
By the end of 2021, India had 15 homegrown cryptocurrency exchange platforms, furiously working the trading and selling aspect of the with more than 1.5 crore users. According to broker discovery and comparison platform BrokerChooser, over 100 million people were trading cryptocurrencies in India, leaving the US and Russia a distant second and third. According to the Blockchain and Crypto Assets Council, part of the Internet and Mobile Association of India, not only experienced investors, but also youth from tier-2 and -3 cities are among those investing in crypto. This young subsegment has invested up to Rs 6 lakh crore in cryptocurrencies.
Nikhil Pahwa of Medianama analyses crypto’s razzle-dazzle effect on India’s youth. “It’s the accessibility that makes crypto so beguiling. At this point, most entrenched stocks in the stock market are out of reach. This (crypto) is like buying a lottery ticket,” he explains.
“A 25-year-old can’t dream of buying Meta stock in the US. Similarly, in India, while demat holders have increased, it’s not fast enough, and doesn’t seem to have been wide or deep enough either. So, instead of putting all your income into slowmoving traffic like fixed deposits, if you start managing crypto trading, with some high-risk-high-return opportunities, young people sense a real opportunity to get rich quick here. There are instances where people have made three times more, so they figure this may be worth the risk. Once you’ve dipped your toes in, currencies can be scaled. You could, for argument’s sake, start with Rs 2 lakh, and here’s the potential to get it to 20 lakh.”
At CoinSwitch Kuber, the most actively traded coins were Bitcoin, Dogecoin, Ethereum, Polygon, and Cardano, while WazirX saw the most activity in Bitcoin, Tether, Shiba Inu, Dogecoin, WazirX, and Matic through 2021.
“Of course, fluctuations are crazy,” Pahwa admits. “For those who don’t work at a deeper understanding, there is a risk in seeing it only as a get-rich-quick tool. But, the fact is that India is restrictive in the investing ecosystem it has cultivated. So, it is understandable younger people are exploring newer, easier avenues. These problems existed, and here pops up a crypto ecosystem with a range that is eye-popping. Bitcoin has one use, Ethereum works like a smart contract, while Matic is trying to make Ethereum more accessible.”
Medha B Dey Roy is a global PR and brand evangelist, heading branding and communications at KuCoin India. She concurs with Pahwa.
“The reason why there’s been a stunning rise in crypto trading across non-metro cities is because trading has its own syntax,” she says. “It’s a skill that doesn’t have barriers of language or location. Young traders who live in smaller cities no longer feel inhibited by their address or lack of expertise in English. Buying and selling on the over-the-counter (OTC) desk, or buying bulk crypto, are pretty easy. The difference is, instead of matching buyers and sellers, the OTC desk acts as a dealer for anybody looking to trade a given asset. This comes in handy when a given trade would not be possible on exchanges, for instance. Some of the young traders are not even banked because they don’t have enough collaterals. The pinch point is limited bank access – banks are uncomfortable providing loans or credit, and young people need to find other avenues. Crypto provides that.”
“Most importantly, trading these coins requires no collateral,” Medha goes on to add. “A young Indian, who understands the hum and rhythm of trading, can pick up the trends of a coin, invest a small amount to begin with, and earn a passive income. States like Goa and Kerala saw an exceptional rise in trading activity because astute young traders took advantage of relatively lower electricity charges, and also jumped on to the role of peer-to-peer (P2P) merchants.”
The P2P route in trading involves direct cryptocurrency transactions between users without intermediaries or a third party. Unlike traditional exchanges, buying and selling crypto on a P2P marketplace does not include charts and market indicators; young traders can purchase and sell coins among themselves. This opens up the chain and brings more people into the fold.
By 2021, the cryptocurrency rage was at its peak. Schoolchildren were talking about it, and many were up through the night trading coins. While cryptocurrency exchanges do not allow trading for investors younger than eighteen, many teenagers found a way to dodge the rules by using their parents’ credentials.
Medha also points to the rise in young women trading crypto, a healthy sign she believes shows the value and diversity in the crypto-trading community. But the numbers there seem to paint a glass half-empty or half-full picture, depending on one’s perspective.
In March 2022, a WazirX survey showed a 1,355 per cent rise in women investors, but they still accounted for just 15 per cent of all users. Among the women, 63 per cent were under 34 years of age, and 82 per cent under 44. In terms of geographies, urban centres continued to have a dominant position with most women investors coming from states like Maharashtra, Tamil Nadu, Karnataka, and Delhi. The report also showed that women investors preferred Bitcoin, whereas men were trading more in Shiba Inu on the platform.
Other exchanges show similar data. At CoinDCX, only 15 per cent of current investors are women; most from metros like Delhi, Bengaluru, Hyderabad, Pune, and Lucknow. Unocoin and Coinswitch Kuber register roughly the same number, while newer platforms like Bitbns and CrossTower had only 10 per cent women investors, as of December 2021.
By way of market cap,12 Bitcoin makes up nearly half the total crypto universe, while Ethereum carves up a quarter. That leaves the wide and varied jungle of Altcoins occupying the remaining 40 per cent market share. These Alts are literally a dime a dozen in their range and identity. Memecoins, for instance, are named after social media jokes and puns – the Dogecoin, of course, prime among them – where the value comes from community buy-in. Then there are forks which, as the name suggests, are Altcoins born when coders make a significant change in a blockchain’s protocol. The change alters how cryptocurrencies are recorded, traded, and received. Forks can either tweak the currency slightly, branch off into a new type, or upgrade the blockchain system enough to render old forms of transactions invalid.
Excerpted with permission from Crypto Crimes: Inside India’s Best-Kept Secret, Mitali Mukherjee, HarperCollins India.